A Carbon Tax Is An Economy Killer, Too

In response to the Waxman-Markey cap and trade bill to reduce carbon dioxide and other greenhouse gas emissions, GOP lawmakers Bob Inglis of South Carolina and Jeff Flake of Arizona are set to introduce carbon tax legislation.

A carbon tax is a direct, more predictable tax on carbon emissions, but that does not make it any more acceptable. Proponents argue that it is better than a cap and trade because it will not unpredictably fluctuate with the ebbs and flows of the market as evidenced by Europe’s carbon trading problems.

Regardless of the efficiency of a carbon tax, any tax to reduce carbon dioxide similar to those proposed in cap and trade would cause significant economic damage and would do very little to reduce global temperatures. Furthermore, the economic pain of higher energy prices will reduce disposable income for other goods and services. Once the economy expands, bureaucrats would likely raise the tax on businesses, which would ultimately be passed on to the consumer.

As with a cap and trade bill, America’s poorest would be hit the hardest. Congress would likely tinker with income tax policy further, making it even more regressive to compensate while increasing the overall burden on Americans in the same way Europe has tinkered with its systems to compensate for the regressive effects of its insidious value-added tax.

Many proponents of a carbon tax emphasize that the economic burden would be less if the plan were coupled with a reduction in the capital gains tax or the payroll tax. Although cutting taxes further would encourage entrepreneurial activity and investment in labor and capital, this would do little to offset the high energy prices that fall particularly hard on low-income households. Higher energy prices would reduce economic activity by forcing businesses to cut costs elsewhere, possibly by reducing their workforce. Regardless of how policymakers implement a national energy tax, it is inherently flawed.

Join The Discussion

Isn't the economy flexible enough to be able to adjust to higher energy prices?

Here in Canada, the province of British Columbia brought in a revenue-neutral carbon tax last July, starting at $10 per ton of CO2 and rising by $5/ton each year. All revenues are returned in the form of income tax cuts, with additional transfers to low-income households. (An alternate suggestion from economist Steven Stoft is to divide up the revenue collected and distribute it equally on a per-capita basis, like Alaska's permanent fund dividend.)

This is the reason why the Republican Party is an also-ran party. They co-opt the stupid socialist agenda.

Demonizing the CO2 is a scam and has no scientifically defensible proof behind it. It is a power grab.

Conservatives and Libertarians like myself must do everything to return our country to its founding principles and the Constitution. We must get rid of all the corrupt and power-hungry politicians. It is a matter of survival.

3. There's a close correlation between atmospheric CO2 and temperature. This graph shows changes in atmospheric CO2 and temperature over the last 400,000 years, based on measurements from Antarctic ice cores. As you can see, the recent spike in CO2 levels is unprecedented.http://www.epa.gov/climatechange/science/images/c…

Bob Inglis represents Upstate South Carolina. We are the most conservtive district in S.C. We believe that God gave us oil and gas to heat our houses and take care of our families. He is a nice man; he means well, and I personally like him very much. However, I do not like what his carbon tax policy will do to our economy and I plan to replace him in 2010. It is the right thing to do and past time it was done. Please visit my website, http://www.christinajeffrey.com. Many thanks to Heritage for this forum.

[…] on a new tax like this during a recession could put the entire economy in a nosedive. As the Heritage Foundation points out, “Regardless of the efficiency of a carbon tax, any tax to reduce carbon dioxide […]

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